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David versus Goliath: 3 ways small merchants can compete with retail giants

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December 3, 2014

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Even small retailers can engage customers effectively.

For smaller retailers, competing against some of the bigger giants of the industry can be a very oppressive feeling. These organizations have all the brand exposure, expansive product offerings, prominent positioning on search engine results pages and thousands of followers on social media, and it seems almost impossible for smaller merchants ands startups to stand a chance.

Yet that is one of the strong points of the Web - it gives any seller the opportunity to reach a wide audience of potential buyers, they just need to know how to capitalize on it and create their own niche. So, what are a couple of different ways the small-time retailers can make a big name for themselves and compete for sales with the big name-brand merchants? Here are a few ideas:

1. Own the customer service process
This is an area where many mom-and-pop stores have traditionally excelled - people walk into the store and the owners know their names, their background, their interests and what they need. Such great customer service helps smaller stores stand out from big-box sellers, which only know customers as a name in a database.

Online, it can be difficult to deliver such in-depth and satisfactory customer service, simply because there are not as many opportunities for customers to put names and faces together. However, many retailers seemingly go out of their way to make customer service as inaccessible as possible - contact information is hidden in the fine print or in some link toward the bottom of the page.

Online customer service can actually be quite robust, however, and it ultimately depends on how much merchants want to embrace. Live on-site chat, social media, email, call centers - these are all tools small retailers can use to solve customer problems promptly and answer any inquiries. While it may not be as personal, this approach does allow retailers to engage customers in meaningful ways that many bigger merchants do not.

2. Fast-moving advantage
Modern order fulfillment and inventory management systems have improved significantly over the years, which gives big retailers a bit more flexibility with regard to how they operate. They can pick, pack and ship orders quicker, add new SKUs and do other critical tasks more effectively.

"A smaller retailer can quickly change the product assortment on its site and optimize it based on customer inputs, A/B testing, and historical tracking of what works and what does not. Smaller retailers can use this nimbleness as a competitive advantage, especially in the earlier stages of the business," Practical eCommerce contributor Gagan Mehra explained. "They should keep this in mind before signing a long-term contract with a supplier, even though it might look financially attractive."

3. Capitalize on marketplaces
Branding is pivotal for some big-name merchants, which may result in them selling products exclusively through their own online stores. Smaller merchants can get their name out there by capitalizing on other sales avenues. For example, they could sell their products at third-party marketplaces such as Amazon and Sears. This helps small merchants get their products in front of a wide audience, even though they may not have the same brand exposure.

The retail industry is a competitive one, but that does not mean small sellers cannot compete. By making the right moves, they can get their own slice of the pie.